Could Twitter Kill Credit Cards?

A nutshell history of money might go something like: First we had barter, then hard currency, then checks and credit cards, then... Twitter? A handful of writers think that
social media tools like Twitter could allow people to seamlessly,
instantly, and cheaply transfer money. If it works, it would eliminate
the need for some of banking's basic services.

How It Will Happen Wired's Daniel Roth explores
the "future of money," finding that social networking services like
Twitter could provide many banking services. "What if people could
transfer money over Twitter for next to nothing, simply by typing a
username and a dollar amount?" Roth explains, "Moving money, once a
function managed only by the biggest companies in the world, is now a
feature available to any code jockey." Roth surveys companies like
Twitpay, which lets Twitter users transfer money via Paypal, that are
providing a cheap alternative to the formal system of banks and credit
cards. "The banks and credit card companies have spent 50 years
building a proprietary, locked-down system that handles roughly $2
trillion in credit card transactions and another $1.3 trillion in debit
card transactions every year. Until recently, vendors had little choice
but to participate in this system" but now that system could be
replaced by Web-based systems like Twitpay or even an app on your
iPhone.

The Cashless SocietyAllen H. Kupetz writes in his book,
"Counterfeiting of currency will proliferate, driving the move toward a
cashless society. Sophisticated new optical scanning technologies have
been a boon for currency counterfeiters, so societies are increasingly
putting aside their privacy fears about going cashless. Meanwhile,
cashless technologies are improving, making them far easier and safer
to use."

Instant Payments That Eliminate Banks Writing in The Futurist, Thomas Frey calls it
a "fractal payment." Frey says that, instead of routing money through
an expensive and slow banking system, you could simply use your phone
or other wireless device to transmit the payment directly to the
seller's wireless device. He says the reason it would circumvent the
banking system is by allowing the user to automatically divide up the
payment between the necessary recipients. "For example, when you buy a
book from Amazon.com, your payment is instantly divided four ways in a
split between the author, the publisher, Amazon, and the shipping
company."

Are You People Nuts? The Awl's Choire Sicha isn't buying it.
Sicha suggests that Twitpay is really just Paypal, which isn't so
different from a credit card. And tools that allow you to use your
iPhone like a credit card reader still require you to go through the
credit card system.

Unfortunately, what we have as a working example now is PayPal, which has its ups and downs. And in practice? They aren't so different, in a few ways, from the big credit card vendors. Remember last year?
"Starting in June, Paypal started assessing a fee of 2.9% on on
purchases marked 'goods or services' to personal accounts." And while
the next PayPal evolution is Twitpay,
which apparently has all of 15,000 users and seems essentially, so far,
to be a way to notify people that you've made a PayPal payment to them,
by means of Twitter, there's definitely something in there. Also it
does not seem to be taking off quite like wildfire?

This article is from the archive of our partner The Wire.

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